used — land speculation will decrease: 'Labor and capital would not merely gain what is now taken from them in taxation, but would gain by the positive decline in rent caused by the decrease in speculative land values. A new equilibrium would be established, at which the common rate of wages and interest would be much higher than now' (p. 442). Chapter 2 in book 9 makes it clear that George's primary policy objective is to equalize the distribution of income and to transfer land rents, which are growing as a share of national income, to the state so as to benefit the whole community. The cutting edge of George's paradigm is the predicted growing inequality in the distribution of income and growing land rents. If the theory underlying the proposition that land is the primary beneficiary of technical progress and economies of scale is faulty, the case for land-value tax, based on distributive considerations, the strong form of Georgist doctrine, is vitiated.
George's argument that labour and capital do not share in the fruits of technological improvements is inconsistent with facts that he did not have. But the historical statistics of the United States provide some basis for George's pessimism regarding the growth of real wages as the disruptions of the Civil War, and related inflation, decreased real wages by 20 per cent between 1860 and 1870 ( US Bureau of the Census, 1975, Tables D.735-8). Real wages did not return to their pre-Civil War period until the early 1880s, a time just after the publication of Progress and Poverty. Real wages then increased by about 25 per cent to 1900, despite the very heavy inflow of immigrants between 1875 and 1900.
Modern Georgists, such as Mason Gaffney and Fred Harrison ( 1994), defend George against various neoclassical critics such as J. B. Clark and R. T. Ely. However, Henry George's grand dynamics are not discussed by these writers, and his dire predictions regarding the stagnation of real wages and growth of land rents are not mentioned, despite the slow growth of real compensation in the United States since 1973. The only reference to Robert Solow in the Gaffney-Harrison book, is to his pro-Georgist letter to Mikhail Gorbachev.
If George were alive today, he might be inclined also to tax the rents earned by Bill Gates, Steven Spielberg and Oprah Winfrey, instead of singling out the hard-working owners of the Irvine and King Ranches.
Bruecker, Jan ( 1986), "A modern analysis of the effects of site value taxation", National Tax Journal, 39, 49-57.
Cronon, William ( 1991), Nature's Metropolis:Chicago and the Great West, New York: W.W. Norton.
Fischel, William ( 1992), "Communication", Journal of Economic Literature, 30, 171-7.